Court throws out $80 million verdict in Bratz case

It’s been almost a decade in the making: the trade secrets fight between two toymakers—MGA Entertainment and Mattel Inc.—and some big-headed dolls called Bratz. And yesterday, the drama was drawn out even longer when the 9th Circuit threw out an $80 million verdict MGA had won against Mattel.

The battle dates back to 2004 when Mattel sued MGA, accusing the company of stealing its trade secrets for Bratz dolls after former Mattel employee and Barbie designer Carter Bryant, who created Bratz, joined MGA. In 2008, a jury awarded Mattel $100 million, but a federal appeals court overturned that ruling in 2010. MGA won the retrial in August 2011 when the judge awarded it $310 million, attorneys’ fees and other costs associated with the long-running litigation. Mattel appealed that ruling and the 9th Circuit sided with the company yesterday.

While the court’s ruling also removed an additional $85 million in enhanced damages, the circuit kept in place the more than $100 million in attorneys’ fees MGA had won. The court said in its decision yesterday that MGA shouldn’t have been allowed to present its trade secrets arguments against Mattel to the jury because the claims weren’t closely related to Mattel’s allegations.

"That both Mattel and MGA claimed they stole each other's trade secrets isn't enough to render MGA's counterclaim compulsory," the 9th Circuit wrote in its decision. "While this may not be the last word on the subject, perhaps Mattel and MGA can take a lesson from their target demographic: Play nice."